New Podcast Episode: Navigating the New Era of Payments in 2024

In KUBRA’s latest podcast episode, we welcomed Yara Alatshan, Senior Product Marketing Manager of Partners and Alliances at KUBRA, and our host Shaun Jackson, Senior Vice President of Marketing at KUBRA, to discuss the digital payment innovations expected to shape the industry in 2024. Listen to the episode below or read the transcript for valuable insights into the top payment innovations to watch for. 

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Shaun:
Hello and welcome to this month's episode. I'm your host, Shaun Jackson, Senior Vice President of Marketing at KUBRA. I have the pleasure of speaking with Yara Alatshan, Senior Product Marketing Manager of Partners and Alliances at KUBRA. Yara has been instrumental in orchestrating KUBRA's latest research on the most promising digital payment innovations for 2024. Today, I'm thrilled to have her join us on the show, where we'll explore the evolving landscape of digital payments and discuss how new payment innovations are shaping how we manage transactions. Yara, thank you for joining us. It's great to have you here.

Yara:
Thanks for having me, Shaun. I'm thrilled to be here and look forward to a great discussion today.

Personalization in Payment Experiences

Shaun:
Yara, the White Paper kicks off with personalized payment experiences as a key trend. Can you walk us through how payment personalization has evolved and what you expect businesses to do to keep up with customer expectations in 2024?

Yara:
This is a great question to start the conversation, Shaun. Customers want a range of options and flexibility in their online payment experiences.

Let me give you an example: If I'm working on my laptop and I receive a reminder from my biller to pay my bill, I would simply log in to my account on the biller's website and pay from there. If I'm on the go, maybe at the park with my kids, and I receive the same reminder, then I'll just log in to my account on the biller's mobile app and make the payment from there.

So it's true that customers want a range of options and flexibility. Meeting these expectations requires businesses and billers to offer multiple payment choices that include both digital and traditional payment options.

Billers, especially in less competitive sectors like utilities, have been slightly behind on personalization. But, fortunately, they've started to realize that their customers are setting their expectations based on the smoothest and most customized payment experiences they encounter elsewhere, like when they shop on Amazon or pick out groceries online.

Surprisingly, according to McKinsey, 71% of consumers expect companies to deliver personalized interactions, and when it doesn't happen, guess what? Seventy-six percent of them end up feeling frustrated. Numbers, they speak loud and clear.

Digital Wallets: A New Norm

Shaun:
I can certainly empathize with that frustration, as I've experienced it myself, and I'm sure you have too. Those are indeed striking statistics. So, if I’m hearing you correctly, you're suggesting that consumers aren't just comparing payment experiences between different billers; they're actually comparing their bill payment experience to every other digital payment experience they've had. Is that correct?

Yara:
You're 100% right, Shaun. For industries that have historically lagged in this area, there's a growing imperative to play catch up.

Shaun:
Billers are also playing catch up on digital wallets, which have clearly become the new norm for many customers. What is your perspective on what sparked this widespread shift toward using digital wallets?

Yara:
I think the pandemic pushed customers toward digital wallets. When COVID-19 first started, we wanted to limit our interaction with other people. We didn't want to touch cash, so we started to use digital wallets for our grocery shopping, for example. Then we discovered how convenient digital wallets are, and we started using them for every other purchase. Customers today want to pay their bills as easily as possible with digital wallets. They give customers and users unmatched ease, security, and convenience in managing their daily transactions. 

With the research we did at KUBRA in 2022 around digital wallets, we discovered that nearly seven out of ten consumers used a digital wallet for their purchases and a significant percentage of these individuals use more than one digital wallet to make payments. The percentages are lower for bill payments, but many customers still use digital wallets to pay their bills.

Shaun:
I think it's fascinating how digital wallets are gaining momentum, yet they're still not as commonly used for bill payments. Do you see any emerging trends that suggest that this might change in 2024?

Yara:
I would say they are common for bill payments but not as common compared to other payments like grocery or retail shopping. To answer your question, yes, I do see emerging trends that suggest this will change in 2024. Simply, customers demand digital wallets. They want to use digital wallets, but the percentages might be lower for different reasons. First, not all billers offer digital wallets, and not all billers offer the right mix of digital wallets. I would like to come back to this point later in the conversation. Finally, if they do offer digital wallets, not all customers are aware of their availability. 

Shaun:
Well, we all know that awareness is key in everything. That makes sense. On that note, are there specific digital wallets that are getting more traction among consumers compared to others?

Yara: 
According to the same research I mentioned earlier, we asked customers what digital wallets they preferred. PayPal was the leading digital wallet chosen by 51% of consumers, followed by Apple Pay at 34%, Venmo 31%, and so on. 

We also asked them how many digital wallets they use. Surprisingly, 35% of consumers use two to three digital wallets, and a further 5% use more than three. For example, I use two digital wallets – I use PayPal and Apple Pay for different purchases and different payments. Just to go back to the same point where I mentioned that billers don't offer the right mix of digital wallets; some billers might think since PayPal is the most preferred, then it's enough to add it. Unfortunately, this is not accurate. 

Shaun:
I completely relate to what you're saying. Just one quick administrative note, for those billers who are tuning in, KUBRA has actually conducted extensive research on digital wallets and their impact on billers like yourselves. If you're interested in diving deeper into this topic, I encourage you to visit the KUBRA.com blog.

Real-Time Payments and Consumer Expectations

Shaun:
Let's jump to another trend that greatly impacts customer satisfaction and that is real-time payments. How is the public's appetite for fast payment processing influencing the rise of what we also call RTP?

Yara:
Picture this, Shaun. You make a payment, and boom, it is settled instantly. That's the magic of real-time payments (or RTP). Consumers can pay their bills immediately, and they get processed instantly. The same for billers – they receive the funds in their bank accounts instantly too. Of course, customers can pay their bills anytime, every day. 

Let's make it clear that customers want things fast. According to our KUBRA Utility Consumer Billing and Payments Report, research that we conducted in 2023, 65% of customers expect their payments to be processed on the same day or even instantly. Of course, their patience for slow processing is fading. I also would like to add here that what makes real-time payments great for billers is the request-for-payment feature which is making RTP even more powerful.

Shaun:
Well, I can certainly relate to the frustration if things don't get processed immediately. We're living in this world where everybody wants instant gratification and instant response, so it makes a lot of sense. 

After hearing about the excitement on RTP, I'm really intrigued by this request-for-payment feature you just mentioned. Can you explain a little bit more about what it entails and how it actually benefits both consumers and billers?

Yara:
Of course. The distinguishing feature of RTP for utilities, as we said, is the request-for-payment tool. It allows billers to send a request for payment to consumers through the real-time payments network. So billers can present a bill directly to customers through their bank's mobile app and the customers can simply open their mobile banking app and approve the prefilled information about their payment – that amount and the requester – in one single step. 

According to research by the Federal Reserve, more than 60% of consumers want a real-time view of their account balance and immediate posting of payments. Another important statistic – 41% of customers are somewhat to extremely interested in billers providing this feature.

Buy Now, Pay Later (BNPL) Impact on Billers

Shaun:
Now I'd like to shift our focus to another innovation, which is Buy Now, Pay Later, or what we also refer to as BNPL. While it's prevalent in the retail space - what kind of impact do you anticipate Buy Now, Pay Later having on billers more specifically?

Yara:
Let me start by telling our listeners what Buy Now, Pay Later is. Customers can pay for their purchases or bills over time and in installments rather than paying the full amount up front. Buy Now, Pay Later, or BNPL, is a tricky one as it presents both opportunities and challenges. On one hand, it offers consumers greater flexibility in managing their finances. 

However, integrating BNPL into bill payments can also introduce challenges. The staggered payment schedule may create confusion for consumers, especially when multiple bills are involved. This could potentially lead to missed payments or late fees if individuals fail to keep track of their payment obligations. 

Another important point to highlight here is that there are considerations regarding the financial health of consumers. While BNPL can provide this temporary relief, it's essential to ensure that individuals don't overextend themselves financially or accumulate excessive debt because they take advantage of these payment methods. They are so easy to use.

I'm not sure if BNPL will become available for billers, but ultimately the success of billers offering BNPL depends on careful implementation and clear communication with consumers, so they need to provide their consumers with transparent information about the payment schedules and potential fees.

Shaun:
Some really great insights here, Yara. It’s a bit of a give and take, with some advantages and disadvantages for this option. Navigating BNPL is without a doubt a very complex task for billers and something they have to think about. While it offers customers greater control over their finances, there are alternative strategies such as flexible payment options and usage alerts that billers can also consider prioritizing now.

Yara:
I 100% agree.

Security Concerns in Digital Transactions

Shaun:
Turning to security – a crucial concern for customers. What are their current expectations regarding the security of their digital transactions?

Yara:
When it comes to online payments, security is non-negotiable. Customers want to feel safe and confident that their personal and financial information is protected from fraud, theft, or even misuse. The other day, I came across a stat that struck me. 59% of consumers expressed more concern about online payment fraud in 2022 compared to the previous year. The stats for 2023 are not yet out, but I'm very sure that they will be even higher because we all get worried about our financial information these days. Thankfully, there are tools available to overcome these risks to consumers, including encryption, authentication, authorization, verification, and fraud detection. It's equally important for billers to address these issues by communicating clearly and transparently with their customers about their security policies and practices.

Shaun:
I completely agree that educating customers is a huge part of making them feel more in control and secure, and this can really help create a partnership between the customer and the company where they both actively safeguard their financial data.

The Cryptocurrency Debate

Shaun:
The last topic on KUBRA’s list of trends to watch is cryptocurrency. Crypto continues to be filled with a mix of both optimism and skepticism. It's always in the news, but it has not really had very positive coverage lately. I'd love to get your perspective, Yara.

Yara:
Cryptocurrency markets are navigating many difficulties including market volatility due to a series of corporate bankruptcies, legal actions, you name it. As a result, public confidence took a hit and until these issues are ironed out, widespread adoption might remain a distant goal. 

According to the Pew Research Center, roughly 4 in 10 adults who have heard about cryptocurrency say that they are not at all confident in its reliability and safety, and an additional 36% are not very confident. So these combined are around 80%. They don't trust cryptocurrency yet.

Shaun:
I'm on that team I have to say, and it doesn't surprise me. I think that crypto is still an enigma for so many people and the jury's still out. I guess we'll just have to watch where that goes.

Summing Up Digital Payment Innovations

Shaun:
This conversation has been truly enlightening for me, and hopefully, it has been for our listeners. What would your advice be to billers looking to update their payment strategies to align with all the latest digital payment innovations that we've discussed today?

Yara:
Yeah, this is a great question to wrap up the conversation. I can start with the very first topic we discussed, which was personalization. Billers should offer a variety of payment options, and with a variety, we're referring to a mix of traditional and digital payment choices. We refer to this as an omni-channel payment solution. 

Also, billers need to offer digital wallets to their customers. One is not enough because a significant percentage of customers use more than one digital wallet. 

Consumers may not be knocking down billers’ doors yet to offer Buy Now, Pay Later and crypto, but we do encourage billers to continue to monitor the space and of course, remain prepared. 

Finally, addressing security concerns is very crucial for building trust with consumers.

Shaun:
That's great, Yara. What an excellent way to summarize all the points that we've discussed today, which really brings us to the conclusion of today's episode. A huge thank you to you, Yara, for joining us and sharing such valuable insights into the future of digital payments, from personalization to real-time payments. It's clear that 2024 is set to be a pivotal year in the payment industry.

Yara:
No, thank you, Shaun, for having me. I really enjoyed that conversation, and it's been a pleasure.

Shaun:
As it has for me. For our listeners looking to delve deeper into the trends that will shape our payment experiences in the near future, be sure to check out the full White Paper, Navigating Tomorrow: The Top Digital Payment Innovations to Watch in 2024. You can find it on KUBRA.com. Thanks again to Yara and all of you for tuning in. I'm Shaun Jackson, and you've been listening to "Experience Better: The CX Podcast" by KUBRA. 

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